Both Ford And GM Have A Plan To Workaround The EV Tax Credit Expiring
Ford and General Motors are working quickly to dampen the blow from the expiry of federal EV tax credits—both automakers are rolling out programs that will let customers continue benefiting from the $7,500 electric vehicle subsidy.
Key Points
- Both automakers will use their finance arms to “purchase” dealer EV inventory before the September 30 deadline, qualifying for the credit and then passing the benefit to customers via lease deals.
- The workaround is designed to cushion the blow of the federal EV subsidy ending under Trump’s July tax bill, which dealers warn could cause EV sales and leasing to plummet.
- Automakers based the programs on IRS rules stating that a binding contract and payment before September 30 counts as a purchase, allowing dealers to continue offering subsidized lease rates for several months.
Reuters is reporting that both automakers will use their in-house financing divisions to artificially “purchase” unsold EVs from dealer inventory across the country by making down payments before the September 30 (today) deadline.
Those down payments would technically count as purchases, meaning the finance divisions would qualify for the $7,500 federal tax credit. Dealers would then be able to lease those already "sold" EVs to retail customers over the coming months with the subsidy baked into the monthly payment—effectively extending access to the tax break.
Everyone is concerned that EV sales and leasing will absolutely crater once the subsidy disappears. Dealers have already seen a surge in demand in recent weeks as some buyers have rushed to secure an EV before the deadline.
The end of the credit—which has been on offer for some 15 years—is a result of President Donald Trump’s sweeping tax bill, signed in July. The IRS has previously clarified that vehicles must be purchased by that date to qualify, but noted that a binding contract and payment before the deadline would be sufficient proof of acquisition. It remains to be seen if other automakers will try a similar play.
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An experienced automotive storyteller and accomplished photographer known for engaging and insightful content. Michael also brings a wealth of technical knowledge—he was part of the Ford GT program at Multimatic, oversaw a fleet of Audi TCR race cars, ziptied Lamborghini Super Trofeo cars back together, been over the wall during the Rolex 24, and worked in the intense world of IndyCar.
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If the vehicle is 'under contract' and 'purchased' by Ford itself, then wouldn't whomever leases it be the second owner and it be a USED vehicle by carfax and state's DMVs? This doesn't make sense and I feel a clarification coming from the IRS very soon to stop this loophole. Also, if it is considered a used vehicle, I thought used eligible vehicles only get $3500 instead of $7500??